Quimbo suggests extending gov’t loans to oil firms to cover ‘replacement cost’

House Ways and Means Committee chair Marikina City Rep. Miro Quimbo is proposing a government-led loan financing program for petroleum retailers as part of efforts to ease the burden on Filipino consumers amid rising fuel prices due to the Middle East conflict.

Quimbo explained that such “replacement cost” mechanism implemented by fuel retailers in the country could disadvantage the consuming public especially when inventory bought at a lower price weeks ago is sold at a much higher prevailing market price.

The Department of Energy earlier said that the replacement cost scheme, reflected in retail prices, takes into account the previous week's average prices, which are then assumed as the cost of buying new stock, allowing firms to estimate the capital required to replenish their inventory for the coming week.

Quimbo said that price control such as mandating fuel companies to sell their stocks near their purchase price, would be more disadvantageous since they might be discouraged from ordering or waiting for prices to drop before replenishing inventory, effectively affecting the overall fuel supply.

“Dito pwedeng pumasok ang gobyerno…since this is a liquidity issue… suggestion namin diyan is kasi pwede naman bumaba the next month eh, bakit hindi muna pautangin ang gas companies ng reasonable rate, interest rate para meron silang pambili,” the lawmaker said at a news forum in Quezon City on Saturday.

(This is where the government can step in since this is a liquidity issue. Our suggestion there is that since it can go down next month, why not first lend to the gas companies at a reasonable rate so they make the purchase.)

“Because oras na bumaba na next month mababayaran tayo kaagad kasi kumita sila eh. So these are things that not to be done or undertaken,” he said.

(Because when it comes down to it, we will be paid immediately next month because they are earning. So, these are things that should not be done or undertaken.)

During the forum, Quimbo also reiterated that the House ways and means panel will probe the possible “cartel-like” behavior of oil companies regarding weekly fuel price adjustments.

He said representatives of fuel firms will be invited to the panel’s hearing to explain their pricing mechanisms.

In a separate statement, Quimbo, who presides the Legislative Energy Action Development (LEAD) Council, said the House is fast-tracking a package of measures to address rising fuel costs, with legislation expected to be ready when Congress resumes session on May 4.

Congress has been on session break since March 21.

Quimbo said the planned legislation will tackle both immediate relief from the oil price shock and structural reforms to reduce the country’s vulnerability to global price swings. —VAL, GMA News